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Incentive Stock Option

Incentive Stock Option Definition

Incentive Stock Option - ISO  is a type of employee motivation as this option can be granted only to employees. The exercise price of the option is usually lower than its market value. This incentive is supported by a tax benefit: if the employee holds the shares for 1 year from the date of exercise and 2 years from the date of grant, his profit is taxed as long-term capital gain, at lower rates than ordinary income.

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